MUNICH (dpa-AFX) - The world's largest reinsurer Munich Re expects further profit growth in the coming years. "At least as things stand today, it does not yet appear that we have reached the end of the road," said CEO Joachim Wenning in Munich on Tuesday evening. He wants to reveal more details in December, when the Dax company presents its new multi-year strategy. Wenning has set himself the goal of a profit of six billion euros for 2024 to 2025. This would mean that the surplus would be more than twice as high as in 2021.
On the stock exchange, the news and a recommendation from HSBC were rewarded with a jump in prices. Shortly after the start of trading, Munich Re shares gained around 2.7 percent to 515 euros, making them one of the strongest stocks in the Dax. The shares of the world's third-largest reinsurer, Hannover Re, gained a good one percent. The major bank HSBC had raised its recommendation for the shares of both companies to "Buy".
Munich Re has already announced a profit of more than five billion euros for 2024. "That will be fine," said Wenning. The actual figure will not be released until the annual results on February 26.
The CEO does not rule out the possibility of continued profit growth in the coming years. He sees opportunities for this in life and health reinsurance, in direct business with companies and at the primary insurance subsidiary Ergo. Investments could also continue to yield more. "We just don't know what the price cycle is in property and casualty reinsurance."
This business also includes coverage for losses caused by natural disasters. Prices for reinsurance coverage tend to fluctuate in multi-year cycles, making the business more or less attractive to providers. In recent years, primary insurers such as Allianz and Generali have had to pay more and more money to reinsurers for the transfer of risks.
Munich Re wants to make itself less dependent on these price fluctuations and has therefore bundled direct business with companies in a new line of business. The group wants to further expand this specialty insurance business, which recently had a business volume of almost ten billion euros.
"It is easier for us to withdraw from one area if we know that we also have other opportunities for expansion," said Thomas Blunck, member of the reinsurance board of management. He has his sights set particularly on Europe and Asia. So far, Munich Re only operates this specialty insurance business in the United States and the United Kingdom.
Meanwhile, the first major loss of the new year is already emerging in Munich Re's property and casualty business. Chairman Wenning believes it is "not outlandish" that the devastating fires in California will cost the insurance industry US$ 20-30bn (€19.2-28.9bn). However, the fires have not yet been extinguished, so the amount could still increase.
He did not yet dare to put a figure on how expensive the destruction will be for Munich Re. He said that the company "can expect this to be a major loss for us as well." However, this would not "throw Munich Re off course." In any case, the insurance industry will only pay for a fraction of the destruction: The economic damage in California will exceed $100 billion, said Munich Re manager Blunck.
The policy of the new US President Donald Trump is not a direct concern for Munich Re. His first decrees and statements "make no mention of insurance or reinsurance, at least not that I am aware of," said Wenning. He therefore expects neither positive nor negative consequences for Munich Re from Trump./stw/jkr/jha/